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The Commanders lost their stadium naming rights deal. Now what?

The Commanders lost their stadium naming rights deal. Now what?

Tooba Shakir 54 years ago 0 0

When FedEx decided last week to end its stadium naming-rights agreement with the Washington Commanders two years early, it left the team in an uncertain position. The Commanders are still years away from moving into a new venue. They lost more than $15 million in revenue from the remainder of that deal — and they’re without a marquee brand name for their well-worn home in Landover.

The team now has three options: It can find a partner to put its name on the Landover stadium as well as the new building, try to land a shorter-term agreement to cover the remaining life of the current stadium or go without a partner for the rest of the time in Landover to maximize the value of a deal for the next stadium.

“It can be very difficult to find a naming-rights partner for a short period of time,” said Brian Socolow, an attorney who is the co-chair of the sports practice at the firm Loeb & Loeb. “If you are that potential naming-rights partner, you’re looking at still paying a significant amount of money and … the value might disappear if you don’t continue to partner. You’ve invested in that asset, and you haven’t necessarily gotten a lot of value for it.”

A shorter deal might mean the team would have to change partners multiple times, which would dilute the brand awareness and lower the value of each subsequent deal. On the other hand, the situation could open up opportunities for smaller regional companies.

But Washington’s naming-rights free agency may have come at a good time. Naming-rights deals for new stadiums have become increasingly lucrative, especially in the NFL.

“The big part of this is the media exposure,” said Al Guido, the president of the San Francisco 49ers and CEO of Elevate, a sports consulting company that is leading the Commanders’ search for a new naming-rights partner. “It shouldn’t be lost on anybody that if you watch an NFL football game, one of the only partners that gets TV visible exposure is the naming-rights partner.”

The last two NFL stadiums to be built, in Los Angeles and Las Vegas, have naming-rights partners that ponied up more than $20 million annually over multiple decades. In 2022, the Pittsburgh Steelers agreed to a 15-year deal with Acrisure, reportedly worth $150 million, to put its name on the team’s stadium, which opened in 2001. Other teams, such as the 49ers and Baltimore Ravens, recently signed big extensions with their naming-rights partners.

One person with knowledge of the market for naming-rights deals estimated the average annual value of the active naming-rights agreements in the NFL to be about $12.5 million. FedEx paid an average of $7.6 million annually to the Commanders. So searching for a new partner now may allow the team to get more money sooner.

And going without a partner for the team’s remaining years in Landover would leave Washington without extra revenue it could use for repairs to the venue, paying off debt or other team improvements.

The likeliest solution is for the Commanders to find a new naming-rights partner that will travel with them to their next stadium — similar to what the Tennessee Titans and Buffalo Bills both recently negotiated ahead of upcoming stadium moves.

“There’s no question that we could find a brand that would go alongside the life cycle of the current stadium, but every brand that we talk to is going to want to talk about where the new building is and what that might mean for them,” Guido said. “ … You’re generally talking about significant term lengths in these deals. So, of course, what we’ll be discussing with any partner is what language gets inserted into any deal around the new stadium. That would probably be a little bit different than maybe doing the deal with a building that has a life cycle of another 30 years.”

The Commanders have temporarily renamed the stadium Commanders Field and will remove the FedEx signage before the start of the 2024 season. Surely, the team’s hope is to put up signage for a new partner at that point instead of adding more costs by changing signage twice.

Because naming-rights deals have become so complex, they typically take four to six months, according to Socolow, who has been a part of multiple naming-rights deals for professional and college venues. Guido declined to put a timeline on the search for a new partner for the Commanders, but if Elevate can secure a partner in the next two months or so, it’s possible a deal could be finalized in time for the season.

Deals entail much more than just a name on the side of a building. They include signage in the stadium and in the areas around the stadium, plus advertising on the team’s website and social media, as well as possible sponsorship of specific games or community events. And if there’s a mixed-use development tied to the stadium’s naming rights, a deal will only get more complicated.

The Commanders may not finalize a location for their next venue for months. But Socolow said he believes the specific location of the stadium — in D.C., Maryland or Virginia — may not have a significant impact on the value of a new naming-rights deal, unless the team tries to partner with a brand whose business is primarily in one of those jurisdictions. And such a deal is less likely, given the cost.

“It’s about the future,” Socolow said. “Even though the Commanders have not had a lot of success in recent years on the field, there is now a lot of optimism about the franchise, given the change in ownership. There is excitement about the possibility of a new stadium, and there’s just a very historic tie of the team to the area. So any naming-rights deal for a new stadium for the Commanders will be sure to result in very significant naming-rights dollars for the team.”

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